A reader writes:
I work for a startup company and money is running out. Over the last year there have been several instances where the owner cannot make payroll and we are not getting paid.
The first time, we didn’t get paid for over a month. This was eventually made up (with a bit extra for “hanging in there”). For the last three months, we’ve been only getting half-pay for a number of weeks, and are still owed several thousand dollars for the missing half. This week, we simply didn’t get paid at all!
Despite this, we are expected to come into work and keep working “business as usual,” and are often expected to put in overtime too. The CEO keeps promising that the money is coming from investors and we will be rewarded for our commitment, but I seriously wonder. Most normal businesses would do a temporary layoff if they could no longer afford their staff, but this place seems to think employees should be able to work for free.
What are my options here? I can’t afford to quit and then not receive unemployment insurance because I voluntarily left a job; but I can’t afford to continue working without money either! Has anyone ever experienced this in the workplace? Is this even legal?
No, it’s not legal. Most states have laws that spell out how frequently you must be paid and how long that pay must be issued after the pay period ends. There are hefty fines, and often even jail time, for violating these laws. Some states also require a delinquent employer to pay employees a “waiting time penalty,” which is additional money on top of your normal wages.
To learn more about the law in your state and how to ask your state labor agency to get involved, go to this excellent resource from Workplace Fairness and click on your state.
Of course, as soon as you file legal action, you’re pretty much giving up on your relationship with your employer (unfair, but true). And if the money isn’t there to pay you, it’s not there, legal action or not.
So this really comes down to your judgment: Do you have reason to believe the CEO? What do you know about the company’s finances and investors that might point you in one direction or the other? What recourse will you have if the company shuts its doors next week? What do the rest of your coworkers think?
Since I’m assuming that no one else there is happy about being expected to work for free either, can a group of you talk to the CEO and come up with a path forward that you’d be satisfied with?
And by the way, you could also file for unemployment meanwhile — if you’re not getting paid, you’re eligible for unemployment (at least in most states). If you end up getting paid for that time later, you’d have to pay it back, but it’s one option to consider. (And don’t worry that you won’t be eligible if you quit. If your reason for leaving is that they weren’t paying you, you’re going to be eligible. Not getting paid is considered a qualifying reason for leaving.)
As for the bigger picture … Personally, I’d stick it out for a very short period of time, but nothing near indefinitely. I’d probably ask myself, “If I never end up getting paid for this time, what amount of unpaid time would I be merely frustrated by and annoyed that I took the risk, and what amount would I be devastated by?” Don’t go near the second number. And meanwhile, be actively, aggressively looking for other jobs.